Rational Behaviour in Extensive-Form Games
AbstractIt is argued that subgame perfect equilibrium behavior is not an inevitable consequence of common belief of rationality among players in noncooperative extensive-form games. The argument centers around a particular extensive-form game with perfect information. In the context of this game, it is argued that if rationality is not common belief throughout play of the game, then it can be perfectly rational to play contrary to subgame perfection, even if rationality is common belief at the beginning of the game. It is then shown that it is impossible for rationality to be common belief throughout every play of the game.
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Bibliographic InfoArticle provided by Canadian Economics Association in its journal Canadian Journal of Economics.
Volume (Year): 28 (1995)
Issue (Month): 1 (February)
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- Pierpaolo Battigalli, .
"Hierarchies of Conditional Beliefs and Interactive Epistemology in Dynamic Games,"
111, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
- Battigalli, Pierpaolo & Siniscalchi, Marciano, 1999. "Hierarchies of Conditional Beliefs and Interactive Epistemology in Dynamic Games," Journal of Economic Theory, Elsevier, vol. 88(1), pages 188-230, September.
- John Carroll, 2000. "The Backward Induction Argument," Theory and Decision, Springer, vol. 48(1), pages 61-84, February.
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